International Postage Treaty: The Next Victim Of U.S.-China Trade War?

Pauline Gross
October 19, 2018

Dropping out of the postal treaty, first ratified in 1874, is expected to exacerbate tensions with China, but the Postal Service and business groups applauded the action Wednesday. And it could crimp shipments of cheap goods from Chinese manufacturers directly to USA consumers - a practice that many US retailers and small businesses say hurts them.

The United States intends to exit the system of setting postal rates for smaller packages under the Universal Postal Union "as soon as practical" and no later than January 1, 2020, said a statement released by the White House press secretary.

The Trump administration is moving to pull out of the Universal Postal Union (UPU), a 144-year-old global treaty organization that sets rates for sending mail between different countries.

"They're using our Postal Service and contributing nothing to the overhead, and Americans have to pay for that", he said.

Officials stressed that the goal is not to leave the UPU, even as they announced Trump's intention to withdraw from the treaty.

Jay Timmons, the president of the National Association of Manufacturers, said in a statement that he agreed with the move.

A one-pound package that costs the U.S. Postal Service about $10 to deliver can be mailed from China for just $2.50, according to White House figures.

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UPU Director General Bishar Hussein said in a statement Wednesday that he "regrets the decision" and welcomed the opportunity to talk further with USA officials. The Reagan administration pressed for change with few results, and a 2015 government report warned that mail from overseas was straining America's postal system.

"The low terminal dues rates have always been unfair and distortive, but the rise of e-commerce has ... hurt merchants and created serious political problems in industrialised countries". President Donald Trump's administration said the treaty has proven unfair to USA business because Chinese shippers pay 20 cents for every $1 American companies pay to distribute packages in the United States.

Zhang Baohui, a professor of political science at Lingnan University in Hong Kong, said that America's departure from the UPU was part of US President Donald Trump's strategy for the "all-out containment" of China but its significance, in comparison to the damage caused by US tariffs on Chinese imports, would be limited. President Trump has accused China of such conduct. The fact is, through the bilateral trade agreement with the United States, you know how much benefit American consumers have got with trade with China over the years and how much money American companies have made from operating in China.

"It's a stunt to distract from the fact that the president promised more tariffs last month and doesn't want to act", Scissors said.

The UPU acknowledged on Wednesday that it had received a letter the same day from the United States to withdraw from the union a year from now.

It is not clear how much the disparity costs USA taxpayers and retailers, in part because the Postal Service does not release detailed country-by-country shipping breakdowns.

Other reports by GizPress

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